4 Stocks With Solid Net Profit Margins to Boost Portfolio Returns
The primary purpose of a business is to generate profits that can be reinvested in expansion or distributed to reward shareholders. The net profit margin is an effective tool for measuring the profits a business reaps.
A higher net margin underlines a company’s efficiency in translating sales into actual profits. This metric offers insight into how well a company is run and the headwinds weighing on it. Nutex Health Inc. NUTX, RCM Technologies, Inc. RCMT, Remitly Global, Inc. RELY and Belden Inc. BDC boast solid net profit margins.
Net Profit Margin = Net profit/Sales * 100.
In simple terms, net profit is the amount a company retains after deducting all costs, interest, depreciation, taxes and other expenses. Net profit margin can turn out to be a potent point of reference to gauge the strength of a company’s operations and its cost-control measures.
A higher net profit is essential for rewarding stakeholders. Strength in the metric not only attracts investors but also draws well-skilled employees who eventually enhance the value of a business.
A higher net profit margin compared with its peers provides a company with a competitive edge.
Pros and Cons
Net profit margin helps investors gain clarity on a company’s business model in terms of pricing policy, cost structure and manufacturing efficiency. A strong net profit margin is preferred by all classes of investors.
However, net profit margin, as an investment criterion, has its share of pitfalls. The metric varies widely from industry to industry. While net income is a key metric for investment measurement in traditional industries, it is not that important for technology companies.
The difference in accounting treatment of various items — especially non-cash expenses like depreciation and stock-based compensation — makes comparison a daunting task.
For companies preferring to grow with debt instead of equity funding, higher interest expenses usually weigh on net profit. In such cases, the measure is rendered ineffective while analyzing a company’s performance.
The Winning Strategy
A healthy net profit margin and solid EPS growth are the two most sought-after elements in a business model.
Apart from these, we have added a few criteria to ensure maximum returns from this strategy.
Screening Parameters
Net Margin 12 months – Most Recent (%) greater than or equal to 0: High net profit margin indicates solid profitability.
Percentage Change in EPS F(0)/(F-1) greater than or equal to 0: It indicates earnings growth.
Average Broker Rating (1-5) equal to 1: A rating of #1 indicates brokers’ extreme bullishness on the stock.
Zacks Rank less than or equal to 2: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) generally perform better than their peers in all types of market environments.
VGM Score of A or B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Let us discuss the abovementioned four stocks out of the 13 stocks that qualified the screening.
Nutex Health is a physician-led, technology-enabled healthcare services company. The stock currently sports a Zacks Rank of 1 and has a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nutex Health’s 2026 earnings has been revised upward by 32.5% to $30.11 per share over the past 30 days. In the last reported quarter, NUTX surpassed the Zacks Consensus Estimate for earnings by 82.13%.
RCM Technologies is a national provider of business, technology and resource solutions in information technology and professional engineering to customers in corporate and government sectors. The stock currently sports a Zacks Rank of 1 and has a VGM Score of A.
The Zacks Consensus Estimate for RCM Technologies’ 2026 earnings has moved northward by 13.3% to $3.07 per share over the past 30 days. In the last reported quarter, RCMT beat the Zacks Consensus Estimate for earnings by 51.85%.
Remitly Global is a mobile-first provider of remittances and financial services for immigrants. The stock currently sports a Zacks Rank of 1 and has a VGM Score of B.
The Zacks Consensus Estimate for Remitly Global’s 2026 earnings has been revised upward by 13.8% to $1.57 per share over the past 30 days. In the last reported quarter, RELY outpaced the Zacks Consensus Estimate for earnings by 268.97%.
Belden is engaged in the design, manufacture and retail of cable, connectivity and networking products in markets, including industrial automation, enterprise, transportation, infrastructure and consumer electronics. The stock carries a Zacks Rank #2 and has a VGM Score of A.
The Zacks Consensus Estimate for Belden’s 2026 earnings has been raised by 5.7% to $8.69 per share over the past 30 days. In the last reported quarter, BDC topped the Zacks Consensus Estimate for earnings by 14.71%.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Belden Inc (BDC) : Free Stock Analysis Report
Remitly Global, Inc. (RELY) : Free Stock Analysis Report
RCM Technologies, Inc. (RCMT) : Free Stock Analysis Report
Nutex Health Inc. (NUTX) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
